Strategy Gap and the BIG Dog
A recent review of strategy execution revealed a gap the size of the Grand
Canyon. David Hunter quoted a number of the The Economic
Intelligence Unit’s findings, but for our purpose let’s look at just these three:
1. 90% of companies see strategy execution as critical to their success
2. 61% report they struggle to execute (what they just described as critical)
3. 56% of strategic initiatives are successfully executed.
Powerful data points. So what’s that all about and is it true at your
organization as well?
Imagine the findings were about getting gas for your car. 90% of the car
owners agree the ability to get gas is critical (presumably the rest either
use hybrids or get out and push). But only half are successful at getting
gas into their car.
Would that be tolerable? Would we stand for it?
No, in fact the world would come to a stop if that was the success rate for
getting gas in our tank, but somehow with strategy it’s tolerable. So what gives?
It looks like when it comes to strategy, we’re all saying one thing (strategy
is really important and critical to execute), but half of us are doing something
else (not making sure that critical strategy is executed)… and frankly I
think it’s less than half.
So what’s really going on if half of the time we aren’t doing what we
consistently say is absolutely critical?
Well it turns out there are a couple of findings that emerge if you
look closely. The first, and easiest, is that we simply go about implementing
strategy in a really ineffective manner. On the surface it looks like we all
struggle with some learning disability in this area, seriously.
Well actually I’m not being that serious but there certainly are
several easy ways to make sure a strategy doesn’t execute.
An almost fool-proof way is to base it on assumptions that aren’t clear,
are inaccurate, and are tied to opinion, not current data. This ensures
the strategy isn’t about being strategic, but rather a reporting function.
Another good way to make sure strategy doesn’t get executed is to ignore
it, other than board presentations, for what you spend your time and money on.
But here’s the real point I want wrestle with. See this picture. Here’s
what it represents in the context of this blog. Strategy is the little dog, and
guess what the big dog’s name is? It’s Cash Flow.
So when people aren’t executing strategy, it’s usually because their time
is consumed with feeding the big dog. And if you had to feed both, and
time is what you fed them with, and if they were both hungry and snapping
at you, who would you feed first? Of course. The big dog wins every time!
Given that reality, how does a company ever get their strategy activated?
How do you get your strategy on top of the “dog pile” so to speak?
I thought you would never ask 😉
Strategy has to sit on top of Cash Flow. Directly connected. What?
That’s right, get your strategy directly pointing at what creates cash flow,
both currently and what your data and trend analysis indicates will create cash
flow in the future. Now, by the way, this takes a lot of work. Why?
Because none of us have it all locked down as to which strategy will
drive cash flow in the future.
This means you’ve got to test, and get accurate data, and test some more,
and take risks. And to many, this all looks like a lot of hassle, and so
they just return to feeding the big dog, as if that dog will live for ever.
Is being strategic more work? Yes.
Is this connection between cash flow and strategy essential? Yes it is.
And yes it’s critical for profit based and non-profit companies.
You get the picture.
Oh btw, the David Hunter’s blog I referred to above, points out that
companies that execute strategy well perform better than their peers 65%
of the time, whereas, those that don’t execute well perform better then
their peers only 18% of the time. It’s not hard to figure out which group
you want to be in.
Get your strategy connected to cash flow. That will make it real and relevant
like nothing else. Then get serious about implementing it with the
discipline of repeatedly validating the assumptions permeating every strategy,
to confirm your strategy is still valid. You’ll be in the minority group
that is ahead of the pack. Go knock it out of the “dog” park.
Don’t you love all these dog images and phrases?